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Our Editors

Chris Yeung

Related Tax Services

Business Structures and Tax Planning

Smart, effective tax planning is an essential component of virtually every successful business transaction. When tackling critical tax issues, you need lawyers with the experience to navigate the sea of complex, constantly changing business and individual tax laws. Look to Dentons.

Sales Taxes (including VAT, GST, and PST)

When supplying, acquiring or importing goods or services anywhere in the world, you need a dedicated advisor who knows your industry sector and can work with you on indirect tax issues. The tax lawyers at Dentons can take you from the initial planning and structuring stages through documentation, registration and compliance.

Resource Taxation

Resource and extractive industries are often a target for tax systems and administrations. Many countries have special tax rules that favor or disfavor particular resources and activities. Tax treaties, changing royalty regimes, and exploration and development tax incentives are just some of the challenges natural resources companies face in today’s global marketplace. To be fully equipped to deal with these issues when they arise, you need innovative, pragmatic tax planning.

Trusts, Estates and Wealth Preservation

Families passing significant assets to the next generation want expert advice so they can feel confident about the security and ultimate disposition of their assets. Financial institutions handling estates of clients need expert, confidential legal advice as to avoiding, or handling, disputes.

Recent Matters

Global Equity Fund Ltd. v. The Queen, 2011 TCC 507

On October 28, 2011, the Tax Court of Canada ruled that the Minister of National Revenue (the “Minister”) had not met the onus of establishing abusive tax avoidance under subsection 245(4) of the Income Tax Act (the “Act”) in an appeal brought by Global Equity Fund Ltd. (“Global”) of the application of the General Anti-Avoidance Rule (the “GAAR”) by the Minister to disallow the deduction of a $5,600,250 business loss incurred on the sale of shares in a private corporation.

Relying on the Supreme Court of Canada decision in Canada Trustco Mortgage Co. v. The Queen (2005 SCC 54), Justice Woods held that the provisions in the Act relied upon by Global to produce the losses had not been misused and she was also unable to discern a general policy from these provisions that restricted business losses in the manner suggested by the Crown. The Tax Court rejected the Crown’s argument that there was a general restriction against the deduction of artificially-created business losses.

The Federal Court of Appeal overturned the Tax Court’s findings. The Federal Court of Appeal allowed the Crown to advance a new rationale for the provisions relied upon by the taxpayer to claim the deduction (sections 3, 4, 9 and 111 of the Act), regardless of that rationale not being pled by the Crown and not being advanced before the Tax Court of Canada. The Federal Court of Appeal rejected the new Crown’s suggested rationale of the relevant provisions and advanced a different rationale to the relied upon provisions not referenced in any submissions placed before the Court or the Tax Court. The Court held that the rationale of section 9 is that “if a business loss is to be used for taxation purposes under those provisions, there must, at least, be an air of economic or business reality associated with that loss.” [para. 63 of Reasons for Judgment]

Integrated Automotive Group v. The Minister of National Revenue, 2011 TCC 468

On October 5, 2011, the Tax Court of Canada ruled in favour of Integrated Automotive Group (“Integrated Automotive”) in appeals from decisions made under the Canada Pension Plan and Employment Insurance Act for the period January 5, 2006 to September 6, 2007 (the “Period”) on the basis that a worker was not in pensionable or insurable employment with Integrated Automotive during the Period. The court held that the worker provided services to Integrated Automotive under a contract for services, and, further that both parties had a mutual intention that the relationship was one of a contract for service.

Pink Elephant Inc. v. The Queen, 2011 TCC 395

On August 31, 2011, the Tax Court of Canada ruled in favour of Pink Elephant Inc. (“Pink Elephant”) allowing the company to deduct 100% of its catering expenses for the 2006 and 2007 tax years. Traditionally, the Canada Revenue Agency allows only a 50% deduction of the costs of meals and entertainment when incurred as a business expense. In deducting 100% of its food costs, Pink Elephant relied on an exception to the general rule that allows a full deduction for amounts paid.

Bozzer v. The Queen, 2011 FCA 186

On June 2, 2011, the Federal Court of Appeal ruled that taxpayers can apply to have accrued interest under the Income Tax Act cancelled, as long as the interest has accrued within ten years of the taxpayer’s application. This decision overturns an earlier decision of the Federal Court and the longstanding policy position of the Canada Revenue Agency. The Federal Court of Appeal concluded that the Minister of National Revenue was wrong in refusing to consider applications for interest relief where the underlying tax debt arose more than ten years before the application.

The Queen v. Donato, 2010 FCA 312

In a unanimous decision, the Federal Court of Appeal dismissed the Crown’s appeal of a costs order made by a Judge of the Tax Court of Canada awarding lump sum costs of $40,000 to Mr. Donato (party and party costs, calculated in accordance with the tariff, would have amounted to just over $10,000). The Federal Court of Appeal held that the Tax Court Judge was entitled to make the award as the result obtained by Mr. Donato at trial was at least as favourable to him as the offer of settlement which he made and which the Crown rejected.

Heron Bay Investments Ltd. v. The Queen, 2010 FCA 203.

On July 29, 2010, the Federal Court of Appeal issued judgment in Heron Bay Investments Ltd. v. The Queen, 2010 FCA 203, allowing Heron Bay’s appeal with costs, setting aside the judgment of the Tax Court and referring the matter back to the Tax Court for retrial by a different judge. The issue before the Tax Court was whether Heron Bay was entitled to an allowance for a doubtful debt under the Income Tax Act (Canada) in respect of a $3.77 million loan.

Collins v. The Queen, 2010 FCA 12

The Federal Court of Appeal held that accrued but unpaid interest on a mortgage is deductible regardless of the fact that the payment was not to be made in the year.

Donato v. The Queen, 2009 TCC 590 and 2010 TCC 16.

In Donato v. The Queen, 2009 TCC 590, the issue was whether the taxpayer realized taxable capital gains when he donated editorial cartoon works to charities. In her decision on costs, 2010 TCC 16, the Tax Court Judge characterized the outcome of the case as “a substantial win” for the taxpayer and awarded him $40,000 in costs. William Innes and Douglas Stewart acted for Mr. Donato at the Tax Court of Canada.

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